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Here's An Easy Way To Play Artificial Intelligence


  • Robotic Companies have the best exposure to A.I. growth.
  • Japanese robotic companies have cutting edge robotic technology.
  • Early year correction gives investors a great entry point into this A.I. passive fund.

Suppose there was an exchange traded fund that focused on the single most important technology trend in the world today.

You might think that I was smoking California’s largest export (it’s not grapes). But such a fund DOES exist.

The Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) drops a golden opportunity into investors’ laps as a way to capture part of the growing movement behind automation.

The fund currently has an impressive $2.2 billion in assets under management.

The universal trend of preferring automation over human labor is spreading with each passing day. Suffice to say there is the unfortunate emotional element of sacking a human and the negative knock on effect to the local community like in Detroit, Michigan.

But simply put, robots do a better job, don’t complain, don’t fall ill, don’t join unions, or don’t ask for pay rises. It’s all very much a capitalist’s dream come true.

Instead of dallying around in single stock symbols, now is the time to seize the moment and take advantage of the single seminal trend of our lifetime.

No, it’s not online dating, gambling, or bitcoin, it’s Artificial Intelligence.

Selecting individual stocks that are purely exposed to A.I. is a challenging endeavor. Companies need a way to generate returns to shareholders first and foremost, hence, most pure A.I. plays do not exist right now.

However, the Mad Hedge Fund Trader has found the most unadulterated A.I. play out there. A real diamond in the rough.

The best way to expose yourself to this A.I. trend is through Global X Robotics & Artificial Intelligence ETF (BOTZ).

This ETF tracks the price and yield performance of ten crucial companies that sit on the forefront of the A.I. and robotic development curve. It invests at least 80% of its total assets in the securities of the underlying index. The expense ratio

This article was written by

John Thomas is a 50-year veteran of the financial markets. He spent 10 years as a financial journalist, ten more years trading for a major investment bank, and another decade running the first dedicated international hedge funds. Seeing the incredible inefficiencies and severe mispricing offered by the popping of multiple bubbles during the Great Crash of 2008, and missing the adrenaline of the marketplace, he returned to active hedge fund management. With The Diary of a Mad Hedge Fund Trader, his goal is to broaden public understanding of the techniques and strategies employed by the most successful hedge funds so that they may more profitably manage their own money. He publishes a daily research newsletter, and offers one of the most successful trade mentoring services in the industry. He currently has followers in 134 countries. In his free time, John Thomas climbs mountains, does long distance backpacks, practices karate, performs aerobatics in antique aircraft, collects vintages wines, reads the Japanese classics, and engages in a wide variety of public service and philanthropic activities. His career has taken him up to 20,000 feet on Mount Everest, to the edge of space at 90,000 feet in the Cockpit of a MIG-25, and to the depths of a sunken Japanese fleet in the Truk Lagoon. Why they call him "Mad" he will never understand.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (65)

Why BOTZ over ROBO?
While NVDA is a high quality pick in its own right, I don't like the pick in terms of an artificial intelligence play. I've always saw Google as the superior pick for an artificial intelligence play.
You didn’t mention symbols Of two of the Japanese companies, so does that mean their private and we can only get them through BOTZ
Windsun33 profile picture
Quite a few of the foreign companies are not on the US exchanges, I found it easier to just buy BOTZ.
Motley Fool recommended IRBT as a forever stock 2/23/2015 @$32.20.
I bought more @$28.55 on2/11/2016.
IRBT then turned around and went up to over a $100. a share before going back to where it is now. $68.41.
I trust Motley Fool and continue to hold a great company.
Yes IRBT was a great stock a couple years ago when they came out with the rooma robotic vacuum and sales took off. Now there is lots of competition and its flattened out at 68. My problem is the last earnings call wasnt that positive and estimates are now in a downtrend as margins get squeezed. The only thing that interested me about IRBT was the CEO explaining they want to have a roomba that can take a 3D scan of your house so you can vocally tell it "Vacuum the kitchen" and it knows where the kitchen is in your home. I am more interested that IRBT would be an end customer of 3D sensing suppliers than the usual suspects now namely smartphones for facial recognition.
petektf profile picture
their products cost an arm and a leg.
Thanks Robert,
I probably should have gotten out when IRBT went over $100. a share.
You just know that when a company goes over 300%, that it's ready for a correction.
I'll stick with them a little longer as the damage is done and I look for them to go up again.
AE_Savant profile picture
Disruptive technology themes are in vogue and drawing much investor attention. This article is very specific about AI robotic tech but this technical disruption and opportunity extends across the economic spectrum.

ARKK is a wide-range bet on disruptive tech and perhaps the best omnibus bet in the sphere. ARKW focuses more on internet innovative technology companies. ARKQ is one that comes closest to AI robotics, with a portfolio that is concentrated on AI and industrial technology innovation. Finally, if you are into genomics, there is ARKG - you guessed it.

I have 3 of these ARK funds and BOTZ and ROBO would be most akin to ARKQ. I have BOTZ and ROBO In my etf watchlist but have been pleased with ARKQ in my portfolio. All of these are in the vanguard of novel investment opportunities and so long as the economy is buoyant, their risk is somewhat mitigated. If we see economic struggles, they will all likely be more disproportionately negatively affected.
how much BOTZ appreciate in 3 to 5yrs..assuming Robotics and AI growth explodes in next 5yrs..BOTZ appreciated more than 50 percent in last 12 months..
i bought some BOTZ
"Without A.I., robots are just a clunk of heavy metal."
"Robots require a high level of A.I. to meld seamlessly into our workforce. The stronger the A.I. functions, the stronger the robot’s ability, filtering down to the bottom line."

These are interesting statements given that robotics have been part of manufacturing for quite some time w/o AI. No doubt that AI will be an integral part of many automation endeavors but most physical work automation (e.g. manufacturing, surgery) today excludes AI just as most office work automation (e.g. call center, robo-advisors) excludes robotics.

"A.I. embedded robots are especially prevalent in military, car manufacturing, and heavy machinery."
I'm curious to know how prevalent AI currently is in these applications. I believe most of this is sensor heavy pre-programmed applications such as in vision sensors and machine guided construction.

In the most simplistic terms, AI is about systems programmed to learn and adapt so they can handle new and various situations instead of a system programmed specifically on how to handle those situations. While I like this type of sector play, I wish the author would have taken the time to touch on the relation and distinction between robotics, automation, AI and sensors as it relate to this ETF.
Windsun33 profile picture
Go to YouTube and search for something like " clothing robots" - Some pretty amazing stuff, even though that sector is still in it's infancy.
ScubaMike profile picture
I bought some $BOTZ stock then in Feb 2018 this happened.Mirae Asset Global Investments late Monday announced that it would buy Global X Funds for an undisclosed sum, the latest in a series of acquisition deals in the red-hot exchange-traded fund industry. The ETF marketplace has seen massive growth of late, although that growth has been principally concentrated (http://on.mktw.net/2hp... investors-flock-to-van... within a handful of major players, leaving other sponsors fighting over a relatively small portion of the multi-trillion-dollar space.
CRMeyer profile picture
I dislike holding ETFs long-term. Those fees always eat away at any profits and exacerbate any losses..
alacer profile picture
An issue I had with ROBO is that it showed correlation with other equities in my portfolio such as EMQQ and AIEQ all of which correlated with QQQ that I suspect may be the best bet as it's moderately diversified. I'm not convinced the market has stabilized, partly since SPY and DIA are still lagging below their highs, the tariff situation hasn't been fully resolved and VIX is still a bit high. For now I'm laying low with entry in just one high quality small cap tech stock, NVMI. Although it has low volume its ROIC is 48% and FCF yield is 9% within a <1yr timeframe.

Regarding choice of ROBO, it appears to lag BOTZ in bull markets with rising QQQ, but I selected it before coming to that conclusion and because it's somewhat more stable due to higher large cap weighting. Right now I don't trust anything with Chinese equities until the trade situation is resolved, because it's mainly directly at China. A new robotics ETF is First Trust's ROBT. It tracks the Nasdaq CTA Artificial Intelligence and Robotics Index and has 56.47% US stocks but only 1.96% CN stocks - see http://bit.ly/2tB1Dft.
Windy Hill profile picture
alacer--thanks. ROBT looks interesting.
captainccs profile picture
ROBT has all of 12 trading days under its belt


Soon there will be more robot and AI ETFs than companies providing and using them. The bandwagon effect! 😇
Windy Hill profile picture
I went looking for an ETF with which to play AI last year. The author is quite correct in observing that most real AI companies are either not public or acquired (or about to be) by one of the biggies (he gives NVDIA as an example of a biggie, but the really active ones are Alphabet, FB, Apple, and Amazon.) NVDIA itself would be a pretty good play but after missing it at $90, I felt I missed the opportunity. Alphabet has been the earliest big firm to emphasize "AI in everything we do", but of course they are too much an ad firm to be considered an AI "pure play."

In the end, I did pick up a very little BOTZ, as the best unsatisfactory solution. But apart from NVDIA (and maybe Intuitive) the collection of robotic firms in BOTZ really aren't that big in AI. In fact several of them seem to be in robotic components and sensors, vs. the "brains" of a robot. (OK there is some application of AI in the sensors and components.)

And of course robots are only one corner of the AI industry--most AI applications don't require a physical implementation like a robot--AI financial advisors, for example. Moreover, because they are a physical product, robots are inherently less scaleable than software-only AI products, so the profit potential is probably more limited.

Bottom line is that I am still looking for a great way to invest in AI.
captainccs profile picture
>>>Bottom line is that I am still looking for a great way to invest in AI.

AI will be diffused in the economy with more "users" than "providers" which is why it will continue to be hard to invest in it. Companies like IBM have great AI in Watson and Deep Blue but it makes up so little of IBM that IBM can't be considered an AI investment. NVDA is probably the closest to being a "pure play" which is why I'm long NVDA in addition to ROBO and BOTZ.

You'll find AI where you find "big data," AI needs big data to work on. Remote health monitoring (BEAT), online retail (AMZN), search (GOOG), markets (V, TREE, TTD), self driving cars, are all users but none are pure AI plays.
Kamil Kolacek profile picture
Great comment, you hit the nail right upon the head. I agree, the greatest A.I. returns will likely be on the software side. I am looking to start-ups, particularly in China in the computer vision / facial recognition / natural language processing spaces.
Kamil Kolacek profile picture
Good points - NVDA, AMZN, GOOGL are your best bets, as well as some Chinese names like Baidu & Tendcent. Many upcoming firms are not yet public either like , Cambricon, Toutiao, Meituan, SenseTimne and Face++, Vicarious.AI, etc..
The two year CAGR for BOTZ is 42%. And a recent correction. So, thank you author for a great recommendation.
imgn.. a great buy
11 Mar. 2018
any dividend in its future?
captainccs profile picture
Not likely or minimal at best. Buy it for capital gains.
Midea group (china) which owns Kuka should be a very good long term investment.
And by his picture the mad hedge fund trader appears to be an old hand at this stock stuff just like me. If I have learned anything over the past 25 plus years its this, nothing is easy when it comes to investments. I am afraid a bunch of novices will take the word "easy" to mean easy gains. Thats a sucker word for the novice retail investor. If investing were "easy" everybody would be a millionaire. Successful investing takes hard work. I suppose thats why I read the percentage of people who actually buy and sell individual stocks now is in the single digits and there is a school of thought that is simply getting on the coattails of money flows into ETF's where the little retail is going and then getting out before they leave the party.
captainccs profile picture
Robert, it's not a question of easy vs. hard but the fact of how wealth gets distributed in markets. Over 100 years ago Vilfredo Pareto discovered the power law distribution of land in Italy, the so called 80/20 rule. That's why you have 75% of mutual funds underperforming and that's why you have the 1% vs. the 99%. You have to be extremely skillful and lucky to get into the top ranks and the smarter everyone is, the smarter and luckier you also have to be.

What an index fund or ETF promises is that you'll be close to the index's performance beating about 75% of the market participants.
What percentage of the performance are NVDA and ISRG responsible for?? Meaning if you take those two names out what return did a person get?? I find people are buying these ETF's and thinking they are "diversified" when in reality its the exact opposite and the top two or three stocks have given all the price performance. People dont understand how concentrated the ETF is as far as stock price appreciation. An example are these "socially conscious" funds that will tout "well look at the price performance and we arent in guns, or tobacco or industrial companies that pollute, none of the bad greedy stuff that harms the environment" Well yeah all the money is in apple, google, facebook etc. What happens when tech doesnt lead the market?? So how much of the price performance is tied to NVDA and ISRG that are right now market darlings??
The percentages for each top position held are mentioned in the article and available at ETF.com. There is no reason to not understand how concentrated an ETF is.

And any concern as to what happens to the return "if you take those two names out" is irrelevant, because those two names are, in fact, not taken out. Just because an ETF picks names that work is no reason to get excited over the fact that if they didn't include those names, they wouldn't work as well.

And if tech stops working, all you have to do is sell your tech filled ETFs and buy something that isn't tech filled.

AKA...buyer beware and employ some DD.

"And if tech stops working, all you have to do is sell your tech filled ETFs and buy something that isn't tech filled."

So thats how it works!! Thanks for clearing that up. LOL.
"Stops working" - What people say when they mean it went down in value and no longer "works" to produce returns.

I see by your comments you arent really an individual stock person and maybe thats where we are parting company. I just commented here because of the "easy" way the headline and this article makes investing seem. Maybe Ron Popeil can license the "set and forget it" slogan to the ETF industry.
own ROBO will probably buy BOTZ too.
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